tv Squawk on the Street CNBC January 11, 2010 9:00am-11:00am EST
welcome back everybody. our guest host today senator judd gregg of new hampshire. you just raised an interesting question with chris dodd. what happens if ben bernanke is not confirmed by the end of january. how does that work? >> it's a really serious issue because continuity of the fed is absolutely critical to confidence in the markets. the simple fact is that after january 31st if he has not been confirmed he cannot serve as chairman and the vice chairman has to become -- >> are you sure? >> absolutely. >> does anyone else know this? >> chris and i know it and i suspect chairman bernanke knows it. >> well, they'll do it. >> well, it's going to be difficult because as you know under the senate rules any one senator can hold things up for a long time. jim has some opinions on the chairman. so do a few other folks. bernie sanders has a hold -- >> from the other side. >> there are a number of holds right now on the chairman so it'll be up to the majority leader senator reid to schedule a series of votes to get him
through. >> and he has other stuff on his mind right now. >> oh, yeah. he may have to redo the health care bill and they claim they want to do that before the state of the union which is the last week i presume in january. >> unbelievable. >> this could all get wrapped up, it could end up really being balled up. >> thanks for coming in. >> thanks for having me. always a pleasure. >> right now it's time for "squawk on the street." live from the chilly financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. >> i'm erin burnett. the bonus discussion back in full force. an unusual word for our open. we are likely to get intimate details very soon on that story. there are many words in that
little thing that i will not read. >> you were wise enough not to go near them. goldman sachs ceo was quoted answering some part of the question. his answer, everybody is going to be upset about it. >> even him? >> details straight ahead. you have to give them their attitude. >> everyone wants to know because last year he didn't get a bonus. the year before he had what, $67 million or $68 million. we shall see. bankers in europe though are already upset about their bonuses and now they are very upset about the comeback of risk. we have some great guests lined up on what's going on in the financial world today. >> a lot going on in the energy area as well. check out oil. up almost a buck at 83.64. gold usually follows and it is up about $20. >> and the markets are set right now to open higher ahead of earnings season so kicking off
of course we'll have alcoa reporting numbers today. the first of the dow to do so. >> all right. let's hit the markets. we start with mary thompson here at the big board. mary? >> reporter: good morning, mark. the s&p and dow at 15-month highs as we enter the open. nasdaq a 16-month high. commodities are higher as you indicated thanks in part to dollar weakness and also that news out of china with the imports increasing by 55% and exports increasing by 18%. basically the strong continued demand for imports also suggesting the strong continued demand for raw materials thus we are seeing strength in commodities today. alcoa of course in focus after the bell expected to report earnings of five cents a share. kicking off what is expected to be an earnings season that marks the end to the profit recession for the s&p 500 members. for the first time since 2007 profits at the index are expected to increase for the s&p members. also, we have macmoran plains exploration higher after the company announced a shallow
water discovery off the gulf of mexico and glaxo is up about 1 or 2% after it agreed to obtain licensing rights from a company called chemo centrics for a treatment for krohns disease. the bp, chevron raised to buy at citi because citi is raising the long-term price target for oil to $80 a barrel. now check on the nasdaq with scott wapner. >> reporter: good morning, mary. thanks so much. nasdaq set to open higher as well. most large cap text out of the gates looking good, google, microsoft, apple, intel, dell, and yahoo higher. intel the standout upgraded to hold from sel target up by three bucks to 20 from 17. they see strengthened pc shipments and increased demand for pcs in china. an interesting little nugget. linear tech watch it off the open as well. lam research looking good, better than 2% upgraded at ubs. net gear up 1.5% upgraded at goldman sachs and vivus getting
a nice bump up, 5.5% there. positive test results for a drug. brian shactman at the nymex. >> reporter: we touched 83.95 in crude not quite to 84. we'll see how the 85 to 86 level is defended. mary touched on it. it's about those chinese -- of course the weak dollar is a factor but a lot of those imports included oil and that's huge. everything is up across the board. i want to touch on gas for a quick second. we have buyers and i also want to talk about retail gas. according to lundberg survey we're up about 14 cents in the last two weeks, almost a buck higher year over year. net gas does continue to sell off a little bit because we are seeing temperatures moderate down the road. i will touch on gold a lot more and o.j. futures at 9.30. let's go to rick in chicago. >> thank you, schacht. whether it's weather or whether we'll have some auctions and today is the tips of the iceberg, 10 billion in ten-year tips. three in six-month bills. all of that is helping to push the dollar lower. the dollar getting slammed.
every currency future on the board is up against the greenback. we see that some of the aftermath of that is showing up in gold, oil. here we go again. and of course the weather in o.j. interest rates record steepness in the yield curve. short maturities dropping to the laisse faire. it's going to be an exciting supply week in treasuries and the dollar weakness. erin, back to you. >> santelli, in asia overnight, japan's markets closed for a holiday. has anyone ever counted all the holidays they get in japan? it is pretty phenomenal especially if you're on fixed income. it really is. in china the shanghai composite and hong kong's hang seng both alded 0.5%. and australia's benchmark advanced 0.8%. guy johnson live in london reporting on the european markets. what do you see, guy? >> yes, thanks very much. coming of age day in japan, erin. that's the latest holiday. european markets are set to be
moving into the green very nicely. earlier on 15-month highs. rolling off that quickly right now. show you the session chart, this is how we are currently positioned, just off session highs by around 0.5% for the stoxx 600. obviously you guys have been happening what's -- have been talking about what's happening with the china trade. this company is one of the beneficiaries. rio is trading up 3714. heineken is the other stock very much on the move in europe today. the brewer is up by 4.5% at the moment. the reason, it is buying the mexican operations, beer operations of fensa. let's go to michelle and find out how the markets are moving. >> let's start with the adr that trades in the united states. we'll see reaction in about 25 minutes. heineken buying the beer assets. that will give them control of several companies. let's move on to the mexican market as well.
there you can see femsa. the country of mexico, certainly the mexican markets will be rocked by the news that one of the leading industrialists there died in a helicopter crash due to fog along with two family members. a lot of real estate interests, a lot of also involved very much in tech. let's move on to the mexican market so we can show you that. whether or not it's definitely going to be affected by the death, not clear, but that market was closed to all-time highs all of last week. let's move on to argentina which continues with its constitutional crisis about whether or not the central government can seize $6.5 billion worth of money from the central bank. oh, mark. typical story we see all too often in latin america. back to you. >> we're not going to cry for argentina. all right. alan valdez joins us this morning. >> good morning. >> monday morning. new year. what's going to happen? >> well, you know, we got alcoa
this morning, that looks good. we're looking for up five cents versus down 28 cents last year. you got that dollar play going on pushing up the commodities, pushing up oil, pushing gold up. close to a little over $18. right now the last time i looked all 30 dow stocks were up stow looks like a strong opening here. >> it looks like the weak dollar strong stocks thing is back. took a little hiatus for a couple weeks but now it's happening again. >> it looked like the end of the year they were rolling out of position so it did take a little off that. you also got china. those exports were great. up 17%. that also pushed up the commodities. right now do you have the weak dollar. >> so you weighed in with this, new money goes into stocks? >> well, you know, i don't know about new money. we haven't that much new money come into stocks. normally you see it come in the first couple weeks of the month but the last few months the new money coming into the market hasn't materialized. it's been slow. the rails push it up, then they go out into the techs. some see a rotation of actual
new money coming in. >> all right. alan valdes, thank you very much. coming up the flying fabulous faber report, erin. >> and the detroit auto show opening today as well. quick check in with phil lebeau who is there live. an exciting one right? nancy pelosi might even come and visit you. >> oh, she's going to be here along with a lot of other politicians. we talked to transportation secretary ray lahood a few moments ago. general motors is going to have a press conference in a few mints. we talked earlier to talk with bob lutz vice chairman of general motors. we asked him about the concerns regarding chevy. keep in mind chevy sales last year down as the company slipped as the number three brand in the u.s. he points to the equinox as one example that general motors in his opinion is going to be fine. chevy will come back and he believes that gm does have an outside shot at turning a profit this year. >> the goal would be to make money on an operating basis.
then there might still be some restructuring charges and other stuff that might still push the figure to a negative. but we're sure going to fight for profitability and a lot depends on the level of incentives. >> bob lutz talking with us earlier on "squawk box" saying general motors does have a shot at making a profit this year. gm press conference starting in a bit. we'll have more interviews with ceos throughout the day and don't forget our special tonight 8:00 p.m. "live at the detroit auto show all access." we'll take you behind the scenes as well as show you some of the new models coming out. don't forget we'll also talk about ford, winning car and truck of the year, sweeping both. that was just announced in the last half hour. mark and erin, back to you. >> thanks, phil. it's interesting. they had what, $50 billion of bailout so they're profitable but i would bet, you know, not counting -- >> gm you mean. >> yeah. if they are profitable. i mean, it's sort of a stretch.
>> a few premarket movers making big news this morning, including jordan. >> that's the maker of playing cards and twine. we're also talking a lot more about two big issues for wall street. the bonus battle obviously back plus risks, sudden and powerful comeback. we are going to have a higher open at the least. we'll be back.
welcome back. the great consolidation in beer continues this morning. there was an auction going on for sometime of femsa, key mexican brewer, two parties interested, sab miller and heineken. about three weeks ago it appears sab decided they weren't as interested as at least some thought they were. in fact, for a while there it looked like they might be the favorite to acquire femsa. but, no, the cong clufgs the deal, which by the way apparently came out over the weekend was expected to be announced later this week, nonetheless, they've plofd ity' up, had a busy weekend and announced this morning heineken will acquire femsa, about a $7.6 billion total price tag. that is when you include debt and pension obligations about
$5.5 billion in equity value. it's an all stock deal. valuing the company about 12 times '09 numbers so 12 times trailing and femsa will end up owning 20% of heineken. interesting. heineken issuing 80 million shares on closing, to get the deal done. they were in tight competition or so they thought with sab for sometime. but it looks like about two or three weeks ago sab said no and here we have heineken of course growing, competing against sab miller, competing of course against anheuser-busch, the three huge ones out there. you also have coors as well. from an m & a perspective the willingness of a family company in a sense to move now certainly perhaps a reflection of more confidence in the market, not that that would be a surprise to anybody but people who were working on this deal tell me that's certainly one of the
takeaways from it. we'll see what happens from here as well. following the deal close and delivery of a lot of chairs femsa will own 12.5% stake in heineken group if you want to get down to the details. they'll be the second largest shareholder in the group and 14.9% in heineken holding. as for synergies they are saying the deal is expected to be accretive after two years with a positive economic profit after six. that could be a while. we'll see how heineken fares this morning. and again, they will also acquire a remaining 83% of femsa's brazilian unit that they don't already own and of course in brazil the key player is inbev, the company that started there, remember, inbev is brazil, belgium, and now of course the united states with anheuser-busch as you take a look at heineken shares and femsa. all right. mark, back to you. >> thank you, david. up next the key stock on the
move. jordan raising forecasts. this could have a big impact on the markets today. and an insider shares his thoughts, next. >> and a key etf conference. mark, why didn't they invite you to speak? >> me? >> yeah, you. >> i'm the one who keeps saying we got too many etfs. >> you know, if they were really confident they'd want both sides of the story. no, we will have an inside look on exactly what's going down there. the industry has taken wall street by storm. that's why mark asks so many questions. there are so many etfsment we'll talk about that popular investment trend and whether it has a future. bob pisani is there.
all right. as we count you down to the opening bell here is a look at the futures. the s&ps are closed right now. i don't know why they do this. they close for 15 minutes from 9:15 to 9:30 on the s&p globex session. anyway, they're up 4.10 about 4.5 above fair value. dow-jones looking higher by about 35. nasdaq also looks pretty good up by about 2 at the open. now to breaking news. consumer products maker jordan stock to watch this morning shares bidding higher after the company raised fourth quarter revenue forecast. for more let's bring in doug lane consumer products analyst at jeffries. doug, good morning. >> good morning, mark. >> are you impressed with what
jarden had to say? >> i am. this company has done a lot to put up stellar results in the face of a weak economy and has done a lot to improve its balance sheet. >> should we buy the stock? >> we think so. we think jarden still has room to move. the stock is among the cheapest among the consumer product group and we think there is room to move up as they have a recent acquisition and return to organic growth should help the multiple as well. >> so what is growing here organically? jarden is an interesting company. everyone jokes about how they make twine. they make playing cards. they make sunbeam crock pot, mr. coffee. i mean, it seems like a random group of brands in one sense. what is selling here? >> that's one of the investment selling points is that it's really not dependent on any one product line to drive the day. they do have pretty stable
offerings as you mentioned, diamond matches and bicycle playing cards but they have more discretionary items, k-2 skis, coleman lanterns so they are impacted by the overall consumer spending environment which has been very weak lately. our view is that they have been declining less than the overall market so they're gaining market shairs. meanwhile, retailers have been very cautious. inventories are very lean. if we get any rebound in consumer spending, not talking refrigerators, just talking about coleman lanterns and crock pots. >> that's people camping which maybe they did more because they were worried about the economy which brings me to the final question. do you read something into this that, hey, we should be more confident about the consumer. they are spending things. or no? >> i think cautiously. again, not refrigerators and washing machines but certainly coolers and lanterns and crock pots and mr. coffee machines so i think the consumer is coming back or maybe the lower ticket discretionary items. >> okay. could be they're camping out because they can't afford the hotel. >> that was part of it this
summer. so maybe. this is fourth quarter. i mean it's been cold. >> thank you, doug. >> not a lot of camping on going on right now unless you have an igl igloo. >> i want to fire up a whole bunch of the lanterns. the final countdown to the opening bell is on the other side of the break. >> nothing like a white christmas in a tent. plus a big day for bonuses. we may find out a lot about who got what. probably not going to find out today though. we'll try to figure out ahead of time. it's over the next couple weeks a nonstop flow of information.
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i can call td ameritrade anytime and talk trades, strategy... anything. td ameritrade. built by traders, for traders. this is what i need. announcer: trade commission free for 30 days, plus get 100 dollars cash, when you open an account. all right. a few minutes before the bell here are your headlines. the ceo of goldman sachs says no one will be happy. packages will be bigger than the public wants. many of the bonuses are heavily weighted in restricted stock. what a shame. jarden shares bid higher as the consumer staples company raises guidance. futures indicating a nicely
higher open. >> as we get to the opening bell let's have more premarket analysis. just a quick followup to mark's point, the average, i guess it breaks down per employee at goldman sachs to about $600,000. we all know it doesn't work that way. a lot of people get a lot less and a few people get a lot more. question to you though. people on wall street getting a lot of stock. are they going to be upset? go ahead, steve. >> i was going to say, i really don't know if people are going to be upset. i think the problem is there are private companies that offer call cash compensation and create a competitive environment where if you're a public investment bank you could lose employees to someone who has the capability of paying a more liquid bonus. it's extremely competitive for high performing individuals on
wall street. so people that really do produce, the real rain makers, they can get a job anywhere. they make a lot of money. they make a lot of money for a reason. they bring in a lot of business. if you don't pay them, they're going to leave and go someplace else. >> john, do you think they will find a way so that there will be a few people at each firm that have huge numbers and maybe it's broken down to stock versus cash, fine, but are we going to see this list of a few that have very high numbers? >> well, i think you may, erin, but what's important, there will be two things that eventually come to fruition from this. first of all, the beneficial thing is the fact that the interests of the shareholders will be more closely aligned with the interests of employees. that's not necessarily a bad thing. even the run wall street has had over the last 15, 20 years. on the other hand, however, you probably may see a back lash best expressed in the coming 2010 elections by what compensation structure remains on wall street. so as the average american, small business, smaller bank
continues to struggle here with the global macro economic head winds there cob a back lash at the polls later in the years and i think traders and investors will be keen to keep an eye on that. >> you lost me there, john. i'm sorry. but the democrats are currently in control. a back lash against them would be to vote for the party of wall street? i'm not following that logic. >> well, i think that it will be easy to suggest that major change, in fact you get these big headlines of large compensation packages coming through, mark, i think it will be easy to suggest that perhaps the compensation structure of wall street has not changed all that dramatically even though taxpayers are subsidizing a lot of these businesses. >> john, how are things in oz? you think the republicans are going to vote on a reform wall street platform? >> i'm not suggesting that, mark. >> they're not talking. >> what i'm suggesting is that
there cob a populist back lash into the summer and the fall against some of the large compensation packages coming through wall street and we should be sensitive to it. >> whoever is not in power gets the back lash even though it sounds completely ridiculous. >> yeah. >> that's kind of how it works. >> you're watching the opening bell. here is the big board, hyatt hotels ticker h celebrating its recent ipo and the opening of its newest hotel. is that what that is? >> yes. they gave out little bags. >> they gave us little cards for a free drink. and at the nasdaq demand tec, ticker dman as in you d man. >> oh. >> a provider of consumer management software. >> that was bad. >> i thought so, too. >> all right. our reporters are standing by. let's get straight to them. mary is with us next.
>> reporter: erin, as expected gains across the board for the dow, the s&p and the nasdaq. this of course building on last week's gains. number of traders telling me before the opening bell we have a lot of price action. right behind me is corning indicated to open higher up about a dollar so after being upgraded both deutscha bank as well as goldman, deutscha saying they expect the solar industry to be the next positive catalyst for corning. commodities are in focus as well today as we are seeing a pullback in the dollar. also of course strong demand for imports from china, a report there adding to the, i guess, upward pressure we are seeing in commodity prices this morning and some of the commodity related stocks as well today. of course earnings season kicks off today so alcoa will be in focus. it was one of the biggest movers to the upside and the dow on friday. the aluminum company reporting after the bell and expected to post profits of five cents a share. also some deals to talk about. femsa selling its beer operations to heineken and then a small acquisition for target as well as the casket company hillbrand today. right now the dow is up 34
points. for more on the nasdaq let's go to scott wapner. >> reporter: the nasdaq is up nine points out of the gate so 0.3%. big cap tech finally coming around over the past couple days after a rather slow start to 2010. microsoft is higher as is google and apple. intel got upgraded over aregis one of the best performers. stocks up better than 1% as i said upgraded to hold from sell over aregis price target higher by three bucks to 20 bucks as well. they see strength in pc shipments as well as demand in china for pc. dell and yahoo higher as well. linear tech to the upside. lem research better than 1.5% on an upgrade at ubs. net gear up. it was upgraded at goldman sachs. vivus pharmaceuticals up on positive drug data. >> the dollar is down. oil is up and so is gold. about 18 bucks back above 1150 an ounce. i also want to touch on orange juice. we talked about it late last
week with cold temperatures on the way in florida. it looks like the worst case scenario was averted. we are off the lows. you are seeing a major selloff today. it was a fear premium priced in and that is out. we'll keep an eye on it the rest of the day though prices have been a little volatile. we want to touch on crude. obviously we got to 83.95 up about 70 cents. the china import numbers are huge here. the dollar is a factor but keep your eye on that news out of china. it is moving price quite a bit and brent following the same suit of course. when it comes to resistance levels look at the mid 80s. citi says u.s. nymex light sweet crude could get to 90 in the next few months. let's go to rick in chicago. >> thank you very much. tens minus 2s at 287. record wide territory. steep yield curve for many reasons of which part is a fed that doesn't look like it's going to raise and a market that needs to raise a lot of supply which brings me to the three auctions today. three month and six month, 24 and 25 million apiece. ten-year tips, treasury inflation protected.
securities that's 10 billion. one of the largest in years and it underscores a preoccupation with the likes of china that they want us to issue inflation controlled securities. why? for the next reason. the dollar getting walloped today but it is off its worst levels. looks to me like every future of every currency is higher against the greenback. let's go back to mark and erin. >> thank you, rick santelli. quick check on the markets? >> the dow up 20. the nasdaq up 4.5. s&p up 3.5. all right. your cnbc edge now with the chief investment strategist at oppenheimer and larry nussbaum chief operating officer at, man, vertex. >> just vertex. >> they gave me two prepositions where i needed only one. all right, larry.
how are things in the vertex? >> things are good. i'm not going to call wall street a bad, tricky, four-letter word. vertex is doing well because we've turned wall street. we're paying people fairly, not looking at fancy compensation packages. we are hiring operators and buying consumer products businesses at a value and discount asset. things are going well on wall street. whether you're a republican or democrat things are going well in distressed equity. >> brian, where is this market headed? >> i think over the short term high. we think over the long term higher but one thing we can all agree on this year it's going to be a little more volatile and markets aren't linear for long. we are clearly linear to the downside in 2008. we are clearly linear to the upside in 2009. i think positive prices are coming but it's going to be a lot more volatile this year given the fact that the fundamental maturing of both the economy and stock market will cause some volatility and cause a lot of let's say indecision for investors especially as the dollar continues to strengthen and let's say especially as we see increased volatility from
international markets. >> the dollar is going to strengthen? >> yes. >> how can you say that when you look at the euro and other currencies? >> it's a great question, larry. i think fundamentally it's always the case that currencies no matter where you are in the world is all about the underlying economy. right? wherever that currency is domiciled. if the underlying economy is going to improve the currency will improve. that's what's happening with the dollar right now. we know there was a lot of strategies the last three to five years built around a weak dollar. as the dollar continues to solidify those strategies will unwind causing volatility. >> how do you factor into that, though, what we saw over the past year? $1.5 trillion of new debt in america. 80% of it was printed by the treasury. >> right. >> we had a lot more dollars out there. >> that's a great point. >> which may hurt the case. >> 80% of that money is still sitting in the federal reserve not exchanging hands. standards are still near all-time highs. money supply is not exactly going back and forth. >> you're not worried it's going to come out? >> no. it's not 1923 germany with the
wheel barrows full of marx going to buy a loaf of bread. that isn't the case. as the dollar continues to solidify and the economy continues to be the little engine that could, chugs along, that'll eat up some of that deficit and the growth will continue to come on. >> i am still not understanding. look at gold and silver and commodities especially minerals and that type of economy is going up. so isn't it countercyclical? shouldn't the dollar be going down if gold is going up to the highest level ever? >> no. again the currency is all about the economy not commodities. you buy gold when you think we're heading into hyperinflation times or you're going into zero growth. we're clearly at neither one of those things. now, that's number one. number two in terms of just fundamentals, there's plenty of supply of gold. and the output continues to gain so therefore we think again there's too much supply of gold and we see gold prices going down. remember, currencies are not about commodities. currencies are about the economy as the economy continues to grow the dollar will -- >> but too much supply of dollars. >> there's not too many -- >> just printing too many
dollars. the inflation risk we have here. >> that point is not correct though because the supply of dollars is not exchanging hands. money supply is down so therefore dollars are not changing hands. >> is that like the remortgages and foreclosures we've seen countless of that are going up by 15%? are you going to say real estate is going up? you're telling me through 2010. i'm not talking about a short-term bubble where you have a quick boom at the turn of the year but long term and aggregate over eight quarters, 12 quarters. what do you see in the future of 2010, 2011? you're talking about currencies. the euro is down. the australian dollar is down. the canadian dollar is down. i'm talking about a global economy. we are living in a global world. >> excuse me. we ask the questions. >> i was actually enjoying this. what did you ask him? >> i'm asking where are we going now with the economy with the global economy. >> where are we going with the economy now? >> going higher. now, the key thing i think most people -- >> make it short. we've already gone like a minute over. >> isn't it great? >> they are really ticked. >> i think what people are
missing is that the delta of u.s. growth is going to be stronger to the up side than international growth. not saying china and the like are going to outgrow the u.s. the rate of growth increase is going to be greater in the u.s. than around the world. >> okay. thank you brian belsky and larry nussbaum. >> not the growth rate itself but the rate of growth increase. now we're going to a derivative of a derivative. >> oh, please. don't confuse me. i'm still trying to get my head around voting for republicans to bring wall street under control. next this morning inside the etf conference. down in boca raton it's the new way for americans to trade if you're into etfs or even want more information about etfs, you don't want to miss this. >> plus, the financial industry group reacts to three major issues right here. bonuses, bailing out of london, because of a bonus tax, and switzerland and why the ultra safe boring swiss have become the kings of risk. ♪
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taking the investing world by storm, this morning some of the industry's biggest players are meeting in boca raton, florida. that's why bob pisani is there. hello, bob. by the way can i ask you a question? how cold is it? >> sure. it's so cold the iguanas are falling out of trees. it's so cold the woman who brought my coffee this morning delivered it in ski parka. i'm not kidding. in a ski parka. right now, erin, it's 39 degrees. >> whoa. >> we have the tropical fish in a hot tub right now. we have the oranges under a heat lamp. we're barely surviving down here. >> and the iguana might knock you out. >> we'll talk to some of these people because this is the index universe.com, inside etf conference, 800 professionals, financial people out there trying to figure out how to get a piece of this action here with the first on cnbc, the chairman of etf securities, the guy who created the very first commodity etf in the world, the australian gold etf. >> correct. >> back in 2003 was it? >> correct.
>> you are one of the founders. we want to talk about commodities. you made a big splash on friday. you introduced the very first platinum and pladiums in the u.s. why would i be interested as a potential investment? >> well, they are an interesting add on to the gold and silver products we've already got out there because they represent two things. they represent an investment in precious metals on one hand, which is good for inflation which is good in turbulent times. they're also -- they also have an industry yam application so you -- industrial application. >> are they used interchange abbelly? does it matter whether you use one or the other? >> you can subs studetitute bet the two. platinum is used very much in the diesel application which is very much, you know, a third world country play on expanding the economies. >> now, there are some limits on your platinum and paladium
positions i think $750 million right now on one and $500 million on the other. are you confident that there is more demand for these products, that you can just go to the sec and create new shares? >> that's right. the way the system works is you apply for a particular amount of shares, which we did. you pay a registration fee. and we weren't too sure how long it would take to get the things through the system so, yes. we would be quite confident that the sec would increase those limits. >> there's a lot of controversy about commodities. some people are saying it's adding to the volatility of the commodities market. what do you say? >> i don't think it does. in fact, our investors tend to be countercyclical. if the price goes up too quickly, they tend to be sellers. and when the price comes back down, they tend to be buyers. so if anything, rather than causing volatility, they reduce it. >> but it has added to the price of gold. how much would you estimate the gold etfs have added? >> i think $50 billion it's in because we started it in australia then moved it to london, etcetera, and there is about $10 billion so far there. about $100 to $150 an ounce over a period of about seven years
where the gold price has gone from about 300 to 1200 in that time. >> got to go but the cftc is expected to make a statement this week on position limits in commodities. do you think the cftc is going to limit the amount of commodities an etf can own? >> i think they shouldn't but i think they will want to understand exactly how you see through to the end investor because we believe the end investor should still be able to get a little bit of an investment in these markets and our investors tend not to be speculative players. >> graham to beingwell from etf securities a pleasure to join you. we are the exclusive provider of television coverage here so we'll have all the big names here in the next two days, talk about all the big industries and what's going on. i got to go warm up a couple iguanas right now. i'm just going to toss it back to you. i got issues down here. >> save the iguanas. >> say hello to the big parrot in the lobby. is he still there? >> you know, it's still there. >> it would have to be. they live a hundred years. >> it's still there. >> yeah.
thank you, bob pisani. >> all right, mark. one of the big stories this morning is the big bonus debate. we're waiting to find out more about who's getting what, how they got it, and the banks are prepared for a lot of moral outrage. that's from people outside the banks and people inside as well. suzanne craig wrote this morning's top story for "the wall street journal." she is live with us this morning. suzanne, good morning. thanks very much for being with us. >> thank you. >> i don't want to read between the lines or impute to people you wrote about motives or attitudes that they don't have. i get a sense that there is -- we just don't care what the reaction is. is that the case? >> well, i think that's part of it. i mean, there is sort of a point where wall street has just said, look. we're going to pay these bonuses and it's just get through the next two weeks. the interesting thing we've been finding even within the banks despite all this outrage, some people are upset even at their own mix of stock and cash. the banks are going to be paying less cash out this year because
they're trying to get more shares. that's part of just the reaction to the government saying we want more ownership by employees to incentivize them to take less risk, more ownership. that has upset some employees inside the banks as well. it's kind of like both ends here, you know, it never ends. >> you mean, they're upset because, gee, i own shares here. i can't run amok. >> no, not so much that. but they want, gosh, they say they have day-to-day expenses. they need to pay the mortgage, you know, some places around the country place and the private schools and everything else. they actually have day-to-day money needs like us all just sort of in some cases a lot larger and they want the cash. >> that may sound ridiculous to some people but let me explain. these people count on making -- i'll just pick a number. $2 million in a year. and they've got mortgages and things and obligations commence your yourat with $$commensurate with that salary but they only get
maybe $200,000 in the weekly paycheck so giving it to them in stock can cause a problem even though it's hard to feel sorry. david faber, you want in? >> yeah sure. always happy to talk to susanne. we're all trying to figure out what the number is going to be. give me your guess. let's do the old over/under. >> i think that's really the only number on wall street that matters right now. i am guessing it's going to come in 2018, 22 around there. anything higher and they'll get in trouble other than his 600,000 in annual money comp he'll take it all in stock that he can't get for five years. >> funny. that's where a lot of people end up right around the $20 million number. i don't know how that plays in peoria so to speak. does it really matter what the number is? >> no. i don't think he cares how it plays in peoria. they have done well. they're a publicly traded company without government assistance and they're going to
pay people how they feel they should be paid. i think his number is a bit moraine issue because it's going to set the pace for the rest of wall street but at this point whether it's 20 or 35 he'll get the same e-mails he's been getting. >> yeah. >> you wonder at what point the clients there start to care. all right. thanks very much. we appreciate it, susanne for you taking the time. we have the bonus question in the united states and obviously lloyd blankfein's numbers of great interest to many people. by the way, jamie diamond is probably breathing a sigh of relief because he would be the other name we'd be talking about if not lloyd. there is a huge fire storm in britain over a proposal to impose 50% tax on banker bonuses which are over $40,000 u.s. you'd pay o50% to the governmen. european central bankers are up in arms. we have the president and ceo of the securities industry and financial markets association. tim, we appreciate you being with us. there is a lot to talk about.
let's start with the bonuses. 50% tax on banker bonuses. do you really think that is going to go through? by the way, we're also talking about doing a tax on bonuses here. does it have a chance? >> let's start with the uk. the bonus tax which by the way is a bonus tax on the employer, a 50% that the employer pays. >> so the employer could eat it or pass it along. >> correct. that has been offered and we assume it will be finalized into law within the next couple months. there are obviously serious questions about that tax. our view is it's a mistake. it's really just a penalty. it's punishment. it's politically very attractive, this proposal, for the brown administration, but we think it's going to have an impact on how these companies do their business in the uk and, specifically, in london.
and that is a longer-term ramification of this type policy. >> that's their problem. >> it is their problem. >> and we benefit don't we? >> well the companies operate -- >> no. our members, we have 35% of our members, employees, are interrelated to the london operations. >> how about the other 65%? >> well, there may be some other areas that benefit. you know, i would expect new york may be a beneficiary. my own sense is we'll see deconcentration of some of these activities. london was a concentrated model so for instance when i started at jp morgan which was in the early '90s we actually had as many people in paris as in london. now, through concentration over the last 17 years more people have moved into london. with this type tax whether it's paris or frankfurt or some other location, that's a potential impact for london which they need to consider.
>> but we're also considering doing the same thing here which would be a tax not on the actual bonus of mark haines but a tax on cnbc of the same amount so the same thing. >> correct. >> not picking on you, mark. >> don't even suggest that i get a bonus. >> well, mark should pay the 50%. >> i don't get a bonus. i'll give you 50%. >> by the way, you are giving them 50% this year. that's a separate issue. what are the odds do you think whether the white house will push for a tax? >> there are some legal issues. in the u.s. we have pretty good advice that a comparable tax in the u.s. would raise very serious constitutional issues. in the uk, there is no secret the industry has been looking at options, legal options because there is a decent argument here that the uk tax is also in violation of the european union
rules. >> what would be the constitutional violation here? >> well, if you have a very targeted tax like this you end up moving into bills of attainder which is unconstitutional under the u.s. constitution. >> let me ask you this. you represent one of the most hated industries on main street. securities industry, financial industry. don't you care? >> of course i care. and, you know, just -- your entire business is based on our industry so i'm sure you care, too. >> yes. >> it's been a very -- i just started this job, you know, a couple weeks before the death and i was in the industry most of my life. of course i care. and sorry about what happened here? we are. are we into massive reform, advocating reform? we are. the compensation that you'll see come out over the next couple weeks will be dramatically different than the compensation structure that existed for instance at my old firm. i was on the compensation committee. there is no way we were paying
out as much in variable consideration. we certainly had no clawbacks. they're going to have clawbacks now. the system is really changing radically and we're not getting any credit for the reforms at all. >> that's good to hear. clawbacks. that's only right. if it turns out two years down the line it was all smoke and mirrors, yeah. all right. i believe they're telling us to wrap it up. thanks a lot. >> thank you. >> mark's tax rate already north of 50 federal and state. >> the dow is now down four. later what a super low vix means for your investments. we realize you might not pay much attention to the vix. but that number could give you a hint about what's coming up for stocks. >> and the ceo of ford alan mulally also coming up. this is "squawk on the street." o 15% or more on car insurance?e you
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>> good to see you. >> we have a couple quick questions for you. what is your perspective that the congressional leaders, what will they see when they come here and you'll be talking with them? >> i hope they'll see a re-energized company focused on making money that has its head on right, that has a lot of really good people and morale is high. i think they'll see that we're doing better and they made a good investment. >> in terms of paying back the loan, you guys are ahead of where you planned on being originally, right. >> we are a little ahead and we hope to have all the loan paid back by june so we'll see how that goes. but i'm confident we can do that. >> will you have any specific message for nancy pelosi when she's here? >> made a great investment. the company is back. we're going to do great. america's going to be proud of us and proud of the people that are here. i'm going to tell her that. >> this is your first auto show, your first chance to take a look at some of the new models here. >> i've seen the new models. >> what are your impressions? >> i like them. what about yours? >> i like them. they look good.
>> as far as this auto show you haven't had a chance to walk around? >> no. >> when you came here, you knew that this was a town that has been just beaten up. >> right. >> brutally over the last couple years. >> right. >> there is a sense by some that there is a little more optimism in this town. >> a lot more optimism i would say. certainly that's true for me, personally. i sense from our employees a lot more optimism. i think we're on our way and i think there are better days ahead. >> ed whitacre chairman and ceo of general motors. guys, back to you. >> thank you very much, phil lebeau. >> the markets now are down just slightly. >> a little bit. no big deal. >> yep. and let's get to our market reporters to check specific names. also interesting we got the whole venezuela link into things today mary. >> that's right. right now we're seeing the markets turn mixed after a higher open today but the dow and nasdaq under a little pressure because of a pullback we've seen in tech stocks the dow reflected in a weakness we're seeing early on in ibm and hewlett-packard. consumer staples under a little pressure as well.
all of this is offsetting the strength that we were seeing in material and energy stocks today. material stocks up in part because of the weaker dollar as well as the data out of china today suggesting a 55% jump in imports there. again just signifying the tremendous appetite that country has for raw materials. a quick check on the material stocks. lead by alcoa which will be reporting its earnings after the market closes today five cents a share expected from alcoa reversing a year ago loss and of course kicking off an earnings season expected to see a gain in year over year earnings for s&p members for the first time since 2007. energy stocks up as well. we had citi actually upgrading chevron and bp to buy as citi is raising its long-term price target for oil to $80 a barrel. they say chevron is the most sensitive to price increases. then we want to check out femsa which is selling its beer operations to heineken. some signs that m & a is picking up a little bit. femsa though, its adr under
pressure down just about 9% right now. the nasdaq under pressure as well. and for more on that we go to scott wapner. >> thanks so much. you said it off the top of your report that technology weakened. that's one reason why the overall markets have dipped into negative territory. certainly we've seen the nasdaq go negative as well. if you were with us at the bottom of the hour on the market open you saw that most large cap widely held technology stocks were actually positive. they've since turned a little bit. that's modest losses i guess. microsoft and google, apple, all showing modest losses as has yahoo. intel is the standout upgraded at auriga. up to $20 from $17. they see some upside in pc demand. pc shipments both here and in china as well. you see why hoo. i said negative. linear tech is a fractional mover to the downside even though the ubs sees a positive quarter there. lam research still in the green upgraded over at ubs. net gear still positive as well up 2.5% on an upgrade over at goldman sachs. a couple pharma stocks, mike huckman is out at the jp morgan health care conference at san
francisco. a lot of news out of that. vivus pharmaceuticals up 3.5% with some positive drug results while mankind is giving about 2.5% back expecting a delay on one of their drugs. brian shactman at the nymex. >> reporter: thank you. the course down here has just two words. china, china, china. dollar, dollar, dollar. one trader actually saying to me if you're worried about growth in the u.s. you're living in the past. it's all about china. one analysis actually has industrial production up 25% in december based on the import/export data from today. take a look at copper. interesting a lot of people think it's a proxy on china growth and it's out performing all the metals today. a quick look at crude. we see of course up 47 cents off the highs of the session. weak dollar obviously a major, major factor there as well. finally i want to add on a domestic story, nat gas selling off once again. really the consensus is temperatures will moderate and the major consumption areas later in the week and that is pressure on prices once again.
let's go to rick in chicago. >> thanks. boy, one in every corner. in corporate land you have pepsico, proof financial, icon, credit suisse, and if you look at sovereign we have mexico. its dollar denominated of course the u.s. treasury kicking off both t-bills and ten-year tips today. ten billion on tips, the biggest and probably what a half dozen, five, six years? the dollar is getting hit pretty hard against every currency. the one that really jumps out at me is we're looking at the euro jump back above 145. the auctions will be 11:30 in terms of bills and we'll wachl how they go. that's eastern time. mark and erin, back to you. >> thank you, rick santelli. bonus season is here and along with it will come a lot of outrage. bertha coombs, good morning. >> good morning, mark. neither of us is getting a bonus. bonus season always a complex process for the major wall street banks.
this year more so with a back lash from an american public still angry over the financial meltdown. according to a number of reports goldman sachs set aside $16.7 billion for compensation in the first nine months of the year and says that its top executives will be paid all in stock but now the "mirror times" is reporting the firm is considering asking the top managers to give a certain percentage of their bonuses to charity to try to mollify the outrage. according to published reports jp morgan told its employees bonuses will be more restrained and according "the wall street journal" compensation could fall below 2007 levels. citi meantime is reportedly still working out the terms of its bonuses but looking at shrinking the cash portion in favor of more stock. nonetheless, the white house's christina romer among those who say whatever the formula the big numbers are offensive. >> you would certainly think that the financial institutions that are now doing a little bit better would have some sense and this big bonus season, of course it's going to offend the american people.
it oefds me. >> but beyond expressing public ire senator judd gregg said on "squawk box" that the government has little to say now on bank compensation here on out after the major financial institutions paid back their t.a.r.p. loans at the end of last year. >> if the banks have some sort of investment for the taxpayer then the taxpayer has a right to control and have a large say in their compensation. if the banks are not getting an investment from the taxpayer then the banks can do whatever they want. i mean, it's their stockholders they have to answer to. if the stockholders are willing to pay those type of bonuses they must be thinking they're getting value for that in appreciation of their stock. >> we're going to peek into the size of the bonuses as the banks start to report. jp morgan is up first on friday, erin. >> thank you very much. as we talk about those issues the calendar packed this week beyond even the bonus conversation. we have trade numbers, retail
sales, consumer prices, and the all important consumer sentiment and of course earnings season begins. alcoa kicks it off today after the close. we've got intel later this week and jp morgan the first major bank. there is a fly attacking mark right now. we are also watching -- it is a little strange. must have survived the winter inside. the detroit auto show is also on our agenda and following the health care buzz from one of the biggest investment conferences of the year is also something we're doing. so how do you trade it? the president of empire execution, peter costa with us. good to see you. >> good to be seen. >> there is a gigantic fly up here. a rather languid fly. >> it's the proverbial fly on the wall. >> a flying thing. >> yeah. it flies. but it's not a fly. >> oh, it's flying but not a fly. >> i don't want to know what it is. some special thing that has been bred in this building. >> looked like a moth. >> probably some sort of genetic mutation we developed down here while we're not doing anything. >> i think it's a moth and oddly enough it showed up just when peter did. >> it did.
so, peter -- >> i'm not going to touch that one. i was looking at a couple things. i'm not a huge fan of this, my first call, which is vwo. it's a vanguard emerging markets. i still think the emerging markets have room on the upside. td only reason i would pick the vanguard one is because it's a very, very low cost provider of etfs. their expense ratio is below, like 0.02% or something. it's a very cheap way of getting into an etf. my other one is cme which for the first time in a million years i'm recommending as stock that is, i mean, you would think at $350 a share would be way overpriced. this company has a broad spectrum of the options. it's the world's largest option in exchange and i think this year we're going to be talking about carbon, trading carbon contracts and what not. they're going to develop products that we're just going to be so, everyone will be enamored. i think this one has a lot of room on the upside.
>> peter costa, thank you so much. >> thank you. all right. why wait for the weekly number on thursdays? for the monthly report the first friday of each month? we have the exclusive "squawk on the street" daily jobs report every day. but in an unsettling development, liesman is not here to do it. >> what? >> yeah. i don't know what that means. we start with an a.p. report. >> he must have swallowed a fly. >> money to build and fix roads and bridges, under the stimulus plan, it has had no impact on the unemployment rate. a.p. goes on to report the boost in the construction industry has been minimal. in marshall county, tennessee, an area that received millions in stimulus money for roads, the unemployment rate continues to go up. this morning on "squawk box" the former treasury secretary robert altman had advice to the obama administration about jobs. >> the unemployment rate is likely to remain in the 10%
vicinity through november. might tick down to 9.5% but it's going to be high. that is going to be a very difficult environment for democrats. is there anything they can do? yes, there is an agenda they can adopt. more quick acting stimulus and president obama is talking about that. i think they're going to have to be more credible and take a stronger stance on deficit reduction. i'd like to see them smooth out their relations with the business community and i also think they've been restrained, perhaps a bit too restrained, towards wall street. >> also on the jobs report, there are reports president obama will start attending more public events that have been to show how concerned he is about the unemployment rate. many analysts say while the official unemployment rate is 10% the real unemployment rate is much higher because of americans who have given up searching for work. most of the time, erin, you hear something around 17%, 18% as the
real unemployment rate. >> it's just interesting what roger altman says. i mean, yes. this whole question of you want to create jobs. >> yeah. >> but you also want to cut the deficit. >> yeah. >> and can you do those two things at the same time? i don't know. but, you know. it's a tough call. when do you change and start going after the deficit? >> it seems to me you're going to -- i don't know. i would think you would lose more votes if the jobs market stays bad. >> right. >> than if you do something to worsen the deficit but that's just my feeling. i think people vote jobs. >> what you just said is actually an interesting point which is it's all about getting votes. and maybe getting votes in the short term involves doing policies that are poor for the long term. >> no. >> no. >> you think our politicians would deliberately put in policies that aren't very good just to get re-elected? oh, boy. >> i'm not saying anything.
>> what kind -- that kind of cynicism is hard to take. >> china has a different government structure and they have a stimulus plan that companies say they're seeing money from and creating jobs. that's all. >> okay. >> now, let's get to the commodities corner. it's back. since we speak about china that is where a lot of the demand is coming lately. let's start with orange juice. down there where bob pisani is. futures are tumbling as the freeze in florida continues. it is expected to moderate though. that's why futures are dropping down. you can see still way up when you look at where they were a couple weeks ago. continuing with the breakfast theme coffee is up 24% over the past year. by the way, there are some incredible stories about thievery and attacks going on in ghana and the ivory coast where they produce most of the world's chocolate. when we talk about chocolate prices and coco for coffee as well. so that was an interesting -- people are getting attacked literally because prices have surged. sugar has more than doubled over the past 12 months. oats are up 21% during the same
i'm hampton pearson. as this year's detroit auto show moves into high gear alternative energy technology is hitting on all cylinders with the obama administration. the announcement expected later today setting aside $187 billion in stimulus money to increase fuel efficiency. nine projects targeting both heavy trucks and passenger vehicles are getting government money. matching private funds are included and tops $357 million. the stocks of one of the recipients has hit a 52-week high. navistar is also getting an award along with the big three auto makers.
now to matt nesto with more stocks to watch. >> thanks, hampton and everyone. good morning. matt nesto here checking on stocks moving. they say it's nice to be fashionably late except in the stock market. i've got three belated calls to tell you about here today. allegheny technology up at an 18-month high goes to neutral from underperformance, risen 70% since november first but bank of america and merrill chasing that higher. morgan stanley raising arch coal that stock up 30% from november 1st. then lastly corning, glw the ticker raised at goldman and deutscha bank both going to buy. that sutock is up 40% since november 1st. procter & gamble the worst stock in the dow this morning cut to market perform at bmo capital. also disney not far behind with a 2% decline is downgraded this morning. the flip side of the media trade
scripps network number one in the s&p 500 this morning. 3.7% higher. thank you ubs. good call. they think no matter what they get in terms of fee increases it's all pure profit. >> shares of tobacco companies all seeing nice gains over the last year. many of them outperforming the s&p 500. last week we had an analyst from ubs. he was very bullish on tobacco stocks. now we're speaking with a former inside innr in the tobacco indu who has a lot of his own money invested in the group by the way. former chairman. altria, former chairman and ceo of a company recently sold to altria. we will assume you still own a significant amount of altria stock. >> that's correct. you think the outlook is good for tobacco shares, tobacco companies, huh? >> i think the outlook is good but it's contingent on one thing and that's volume recovery in the second quarter.
in 2009, there was a giant federal excise tax that took the industry volume declines from a typical 3% to 4% to a low double digit decline. once you get past 12 months for the tobacco stocks to have a good year it's got to go back to that minus 3% or 4% so they can continue to raise prices and pay great dividends. >> but the prices are going to continue to go up. that's not exactly a strategy for making more money is it? i mean, we've already seen demand is not ever lasting. people will stop buying cigarettes if they get too expensive. >> temporarily but history has proven itself time and time again that consumers get used to t the national average price for cigarettes is a little over $5 and in many parts of the world and in this city you know you're paying $10 for a pack of cigarettes. so it's actually a relatively elastic category with a 0.35
elasticity but you can't raise prices when you're declining double digits and based on my history, i would expect to see it go back to a normal trend once you get into the second quarter of this year and i think tobacco stocks will have a great year. >> so many people talk about the end of the industry but it was ending and i think we've all now learned, and i don't say this with any sarcasm, it just is what it is, the states in this country need money from the tobacco companies. i mean, it's a symbiotic relationship. states need tobacco companies to survive to pay them the money. is it safe to say that the industry is not going anywhere in this country. i mean obviously most of the growth is overseas but in this country? >> well, i think you have to give the tobacco executives, the ceos a lot of credit. they see their volume declining and what they've done is repositioned their companies, reynolds, altria from cigarette companies to total tobacco companies hence the acquisition of ust by the company i ran, by altria last year and reynolds buying conwood and rounding out
their portfolio. >> things like chewing tobacco. >> where, you know, they're still growing categories and represent an opportunity for them to have a longer term future. >> but you are not saying you expect tobacco to be a growth industry in the u.s., are you? >> no. people don't buy it as a growth industry. they buy it for the dividend. it pays a 6%, 7% yield but they want to know when they're getting that 7% yield the bottom isn't going to fall out while they're holding the stock. >> so overseas where is the growth? in a lot of the developing markets, even developed ones that there is, you know, heavy smoking like japan, right? i mean, have you seen any change there? still growth? >> well, there is growth but there's still more opportunities for merger and acquisitions around the world than there is in the u.s. so, you know, you have companies and spun off like philip morris international to philip morris usa which is now altria in able to focus on that growth and not get tied down
with the litigation risk in the u.s. i think there is value creation opportunities on both fronts internationally and in the u.s. i'll quote nick. the tobacco stocks have outperformed the general s&p 11 of the last 13 years. >> all right. thank you. murray says buy tobacco stocks fort dividend yield. just ahead the faber report. plus, ford ceo alan mullaly on his plans to make ford the leader in the global auto industry. >> and piles of cash? actually no. piles of stock going to wall street bankers. can anything be done to cool the bonus back lash? we'll hear from the afl-cio later this hour. calling chase sapphire, seeing if we have enough points to stay longer. now? you don't have enough time... and you have to push all those buttons... no buttons, someone answers every time. yeah, right... bet you a massage... yeah, ok. hi, julie... i have a question about my points. hi, what button do i press for a massage?
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welcome back. something i'm sure we'll do a lot of in the next decade or the decade we've just started is talking about china. one of these days we'll probably have a lot of people hanging out in beijing to tell you about it but for now you have to deal with me. we've already mentioned this but worth mentioning again, since there is also a growing debate
on whether the incredible economic growth that china once again appears to be having is real. more on that in a moment but take a look at chinese exports because they did grow after 13 months of decline. exports up 18% from a year ago. now of course the chinese have been trying to create a lot of domestic demand and have been doing so fairly well but, still, you know, talking about it representing what, 30% of gdp or something like that, far below that of most industrialized countries. imports, though, were up 56% from one year ago. the source for this of course china's general administration of customs. now, annual trade data, exports down 16%, so far to 1.2 trillion if you're keeping an annualized rate here. imports, 11.2% to 1 trillion. take a look at the trade balance though. they got, you know, more coming in or at least more than they used to. still, more going out but more coming in than they had. so that's starting to tighten up
a little bit, a little bit you can see where december exports were versus imports. that all important trade balance overall for china. now, when there are those out there like jim chanos a year or so ago talking about china being a huge bubble they focus on things like bank lending. they've got evidence that helps support that case if they want to try and make it again. $88 billion in new loans for the first week of 2010, nearly twice as much as the monthly average over the second half of '09. the first half of the year, the banks also were lending at an incredible pace but that was cut down significantly. so perhaps they are simply loading up again first half only to cut back second half. the finance minister says in 2010 we'll have active fiscal policies that continue. we are not creating a credit bubble. of course china would say and they also say hey all the statistics we give you are absolutely real. that debate will rage but for now at least china certainly
looking to be stronger on the export and import front than it had been previously. all right. just ahead, making money on market complacency. and ford's big comeback. the stock up 340% over the last year. ceo alan mullaly our special guest from the detroit auto show, next, and as we head to break let's check out the dollar. "%"%"%"%"%"%"%"%"%"%"%"%%
welcome back. it is 7:31 on the west coast. that means it is 10:31 here on wall street. here are a few headlines for you. orange juice futures are down about 9% this morning off of their highs. florida's citrus crop seems to have endured the cold weather. warmer temperatures are expected this week. keep in mind, though, prices have surged so they're down just a little bit relative to where they were before. shares of consumer staples firm jarden, what was it, bicycle cards that they make? >> diamond matches. bunch of stuff. >> sunbeam thermoses, camping lights up about 3% the company raising its forecast obviously an indicator people are buying that stuff. and the markets overall are a bit mixed right now hovering around the flat line ahead of the big earnings season which begins after the close today with alcoa, mark. >> let's look at the markets in detail. right now the dow is up a hair as you can see. nasdaq is down 1/3 of 1%.
s&p also up just a tad. internally, how do we look? not bad. about 500 more up than down on the big board. nasdaq? 75 more down than up. no biggy. shares of ford up more than 350% over the past year. today ford sweeping the 2010 north american car and truck awards at the detroit auto show. third time a single auto maker has claimed both titles. phil lebeau at the detroit auto show with the man behind ford's resurgence, alan mullaly. phillip? >> he's always smiling but today that smile is a little extra wide, a little extra bright. congratulations on winning car and truck of the year for the transit connect on the truck side and car of the year, a fusion hybrid. >> thank you. >> how surprised were you? >> well, i like to say we were surprised but we've known and the consumers have told us that
we have two fabulous vehicles in the transit connect and ford fusion. >> the big story for you today is the unveiling of the focus. this is going to be a truly global car meaning the one that's built in the u.s. and sold in the u.s. is the same as the one in china, same as the one in europe. there might be very minor tweaks but generally the same. this is something ford has struggled to get right in the past. why do you believe you have it right this time? >> well, as you know and you've really covered it, when we got everybody together three years ago we made some really fundamental decisions. one was we're going to focus on the ford brand. two, we're going to have a complete family, small, medium, large cars, utilities, and trucks. and every one, phil, was going to be best in class in quality, safety, and smart design. and we were going to leverage our global assets, our intellectual capital around the world. what you said with the new fiesta now, the new focus, and the fusion, they come together, here is a car with 10,000 parts and 80% of the parts are going to be exactly the same and the last piece tailored to the unique customer requirements so
you can imagine what that means to quality and fuel efficiency and cost reduction. >> given the fact that you had sales much better than expected in the fourth quarter and particularly in december, especially on the retail side, why not change the guidance? wall street clearly believes but based on where your stock is trading, clearly believes you're going to reach profitability for good well before 2011. why not change guidance? >> i understand. following our practice, we will give an update to our guidance at the end of this month when we release our fourth quarter results and our year end. clearly what we already have communicated is we believe we're going to be solidly profitable in 2011 and when you look at december our sales were up 33% and the annualized rate of sales in the united states was at 11.5. i think even though we're being conservative for 2010 we'll give updated guidance when we do our earnings call later this month. >> any chance we might see sales pull back a little bit from what people originally projected because this economy is struggling to make that next
step? >> i think it's a concern because it is a fragile time as you point out but all of the data we see especially the sales in december, which were around 11.6, says that we are, i think, a very prudent call for next year in the 11.5 to 12.5 range. and with that we'll be able to -- we'll have the right products at the right time for consumers as this comes back. >> you now have been here for three years. when you first came here there was clearly an attitude of we can get this right but we're almost not sure of ourselves. now you've got momentum. there is a swagger for the people at ford. any worries about over confidence. >> i would characterize that as a quiet confidence but, clearly, when we pull together on this plan, what you're seeing today is absolute proof points. execution on the product family and on each of the individual vehicles. to be named, you know, car or truck of the year as you pointed out, car of the year around the world, international car of the year, this is what ford lives for to make the very best cars and trucks in the world.
nothing is going to deter us from that consistency and purpose. >> so you are aware that there are people saying they've got a swagger at ford. you don't want your people to become over confident. >> absolutely, phil. i think that it's not just ford but a lot of businesses as they come through something as horrible as what we've all seen the last couple years, and we actually accelerated the investment of our new products and services this is a reason to be very excited about our product line but this is a long-term profitable growth is our goal for everybody so you're going to see an absolute consistency of purpose in making the best cars and trucks in the world from ford. >> alan mullaly the main man at ford, ceo who has the car and the truck of the year. a nice sweep. >> thank you. did you get a good shot of the fusion? 41 miles to the gallon. 8 miles to the gallon better than the competition. >> the salesman comes out. >> you drive one and feel the difference. >> the salesman always comes out. alan, you have to watch our show tonight at 8:00. we'll be talking about the fusion. the transit connect. all coming up tonight 8:00 primetime. all access to the detroit auto
show. guys, back to you. >> thank you, phil lebeau, coming up the vix dropping below 17 for the first time since may of 2008. a sign of market complacency? will it give way to a sharp and sudden move? >> plus, bonus critics are outraged. wall street employees are underwhelmed. lloyd blankfein says nobody will be happy but everybody wants to know whether lloyd is happy this bonus season.
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here. their fourth quarter results came in with a big loss, a buck 40 on a share versus a two cent forecast in the profit. they're going to raise more money about $400 million and cut their dividend by 80% to a penny from a nickel so asbc getting slammed this morning. seagate is having a good day, raised to buy from hold at aurgis up we'll call it 3% between friends. why not? and is very, very strong here today. caterpillar lead go-to dow. what's interesting is not only is it leading the dow, there is not a lot of news flow on this but traders are watching the volume level. the volume is already doing more than 100% than it has in the past ten days at this early hour. we'll say one hour of trading. so big volume flowing into caterpillar. we have to keep an eye on that one. teradyne strong in a weak sector. not a washout but teradyne very strong today. that bodes watching as well. limited within retail chasing it
here, raised to buy from hold at jessum and lamont good for 60 cents on a $20 stock which ain't too shabby. >> thank you very much. investors are complacent. that is according to the volatility index referred to as the vix. today it is up -- it is not at this moment but had earlier dropped just below 17 which was the first time it had fallen that low since may of 2008. that was after bear stearns, mark, but before fannie, freddie, lehman, aig, and, you know, the colossal collapse. is it a sign that stocks have topped? how do you trade a market where there isn't volatility? dan demming is our guest. it's good to have both of you with us. dan, a lot of people say when there isn't volatility it means people are complacent and that's when some sort of an explosion happens that can either kill you to the down side or cause stocks
to surge. is that what you think will happen? >> dan hutchinson or dan demming? >> you are both dan. right. why don't we throw it to dan demming? >> all right. erin, it's interesting to point out you're seeing volatility like you said open very low on a monday which is very unusual. we're seeing volatility continue to come out of this market but if you look at historic or realized volatility over the last 20 to 30 days you're seeing realized volatility much, much lower than where the vix is currently trading. so apparently you know it's kind of really, there is pressure because there is that gap between realized and implied volatility looking at the vix measure. i think you'll see that gap pull each other towards like the vix lower and maybe historic volatility a little higher as we move through the month. >> dan hutchinson are you concerned about the vix level or you think no? >> no. i mean, i think in general you have to, just as dan was saying,
re realize, ten-day, 20-day volatility is under 12 and if you look at where sort of one month at the money, s&p options have traded relative to 20-day realized volatility, you know, you get a ratio that's sort of just north of one. so you get s&p, you know, the s&p implied volatilityies that drive the vix can be as low as the 12 or 13 handle but i don't think we get there. >> dan deming. >> yeah. >> i want to make sure i understand what you're saying now. >> okay. >> yeah, i get the difference between realized volatility and implied volatility. the market is actually less volatile than the vix is indicating and i like the fact that that means so maybe we shouldn't worry about it but doesn't the vix making new lows while the market is at new 52-week highs mean an awful lot of people are on one side of this market?
>> i agree, mark. there are a couple things to point out here. number one, that is something that concerns me especially like this morning when you see the vix like it did in the open with the market opening at new highs. now we're seeing a little reversal. we'll see if it continues to feed on itself as we move through the day. that is a critical mass point you kind of look for. what we've seen the last few weeks is we've seen good news be good news and bad news be good news. the market even last friday, the unemployment report not so strong but the market was able to stead il itself and move higher through the rest of the day. that also is a point where i like to think there are just too many people on one side of the market. i'm a little cautious for sure as we move into earnings season that the volatility could kind of move higher if there is some event driven news out there. >> dan hutchinson, does the vix say that the wall of worry is no longer there? or does it not? >> no. i think that, you know, the vix as one short-term measure suggests there is still a wall
of worry there as dan deming and i have already noted in terms of the spread to realize volatility but i think, you know, there are other metrics in the volatility market that you have to consider and things like looking at how expensive downside insurance is relative to after money and things like that. there are a number of other volatility metrics out there that suggest that the wall of worry really still is in place. and as other risk metrics start to normalize. i think the thing where people traditionally get concerned is if vol sells off. if the vix declines and the s&p and broader market does not continue to make new highs, that's when it starts to worry people. that's sort of the measure of complacency where the expectation of risk as expressed by the vix declines but the market doesn't make new highs and that's when people start to be concerned. so as long as the market
continues to rally into earnings, as a lot of people expect it to do and i think that's what you're getting i don't think the selloff on the vix is particularly concerning right now. >> dan and dan, thank you very much. appreciate both of you being with us and as they were speaking just this headline crossed that i want to make sure we bring to your attention from the auto show. dow-jones reporting chrysler's ceo expects to be hiring in 2010. >> okay. >> obviously one of the -- >> that's good news. >> i just want to make sure obviously that's all we have on that but when we get more we'll get it to you. an interesting headline indeed. straight ahead big money, big egos. bigger bonuses. is wall street ready for the banker bonus back lash? or not? >> the banker bonus back lash. say that three times fast. >> yes. >> but first, oh, melissa? >> i would think they're used to it by now. coming up at the top of the hour famed hedge fund manager leon cooperman will join us exclusively through the hour. we'll talk markets, hedge funds, the economy, and bank bonuses of course.
we're doing an all day brace yourself for record payments. it's a hot debate many of the stocks, come on, have tripled this year. does that justify the big payouts? all that plus a live report from the detroit auto show and the state of the luxury car market only on "the call" at the top of the hour. first "squawk on the street" is back right after this break. and i was wondering if i could say hi to the doctor. is he in? he's in copenhagen. oh, well, that's nice. but you can still see him! you just said he was in... copenhagen. come on! that's pretty far. doc, look who's in town. ellen! copenhagen? cool, right? vacation. but still seeing patients. oh. [ whispering ] workaholic. i heard that. she said it. i... [ female announcer ] the new office. see it. live it. share it. on the human network. cisco.
all righty. here's this morning's milestone. alcoa trading hard ahead of the earnings report this afternoon. company went public 30 years ago in 1980 at an ipo price of $4.05 a share. >> banks are bracing for outrage on bonuses. not just from the public but their employees as well. no one would be happy. it appears that's the way it is going to be. people on wall street feel like they are getting short-changed. people on main street peel like people on wall street are getting way more money than they deserve. dan podatri, office of the investment director. what's perspective of organized labor on wall street? compensation, are you -- you know, they completely changed the structure. so they say.
will it be in stock? not in cash? do you care? are you happy? >> i think perspective of workers both as employees and retirees whose retirement savings tone banks is that the senior executives continue to treat these firms like their personal atm machines and that's despite record unemployment and estimated retirement savings anding the fact that they received billions in bailouts. so it really argues for the need for real financial reform so we can rein reckless behavior and have government and the capital market system serve the service of workers and small businesses, not reckless ceos. >> can you make the argument why these guys no only should be paid, not in stocks, be paid in cash? if you are paid cash you have to pay tax tows the government. we won't have as much of a budget shortfall. >> the key question is here who should decide, how much is too much, what kinds of arrangements
and philosophy on compensation should you have, should it be the government, should it be congress? should it be regulators or shareholders? you know boards of directors. i think that's the key question. the other key question is how long will this storm last? is this one year phenomenon, one or two or longer term, what would the effects be on compensation for financial services organizations? >> i think we are in agreement that boards should be deciding, board accountability. if these firms are asking taxpayers for billions of dollars, it is not unfair to ask them to change what's -- what the, you know, ceo of your parent company said an incentive structure and move to long-term value creation. we have -- reason there's anger in this country is viewly exhibit bid two sets of numbers. one is the senior executives lehman and bear stearns and eight years before the crisis, each pocket is about $250 million each. median 401(k) account balance in this country by way of contrast is about $27,000.
people relevantize the system is broken and need to fundamentally change the incentive structure. >> dan, you should be at least somewhat pleased that the fact that much of the bonuses are in stock which should align the executives' interests with the shareholders' interests, right? >> i think we need to see more of what some firms are doing. that's -- performance shares that have a five-year lockup. and much better board accountability. also, clawbacks. a lot of the results that were posted in the bubble years weren't legitimate. they were fundamentally -- we immediate to get that money back. >> do you have a problem with clawbacks? >> no. a lot of organizations had that for a long time. these schemes have existed on wall street since the early '90s. merrill lynch did it on herb allison. not all these companies ask for taxpayer money. some were encouraged if not forced to take it. in way some of these
organizations and goldman sachs singled out, i believe, being punished for their success. it is an interesting phenomenon. again the question is how long will this so-called -- >> they were also bailed out to the tune of billions of dollars through aig and everyone recognizes that. i will go back to what jeff said. made the most mistakes with the least accountability. we need to change the system in the country and system that regulates or financial markets. that's why the debate is under way in washington. >> one thing that i strongly agree with you is that the board should be accountable. compensation commits should be accountable and they are reacting to the public pressure, no question about it. which also means, by the way, the shareholders have to really be careful on who they appoint as members of the compensation committee. >> you are right. we also need to see much stronger votes in terms of the advisory vote on pay. but we need to fire bad directors and there are still way too many bad directors on the boards of banks. >> i think that point about the
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